THE MARKETS: Market Place; Dressing for Success: Check These Salaries

Many shoppers know that when they are buying a designer shirt, they are paying for a bit of glamour associated with the name. Investors in apparel companies may not know that glamorous names in executive suites can come with a high price, too.

An analysis by Graef Crystal, a compensation expert, has found that total compensation for the chief executives or head designers of nine publicly held apparel companies was on average 3.1 times higher last year than compensation for executives who run companies with similar sales volume and stock performances.

''This is one industry that is wildly high,'' said Mr. Crystal, who has a newsletter, The Crystal Report, and who conducted the analysis of apparel companies for The New York Times.

Take Tommy Hilfiger, who as honorary chairman and chief designer for his namesake company was paid a salary last year of $10.4 million -- the highest among executives of companies in the Standard & Poor's 500 index. In contrast, Joel J. Horowitz, the Tommy Hilfiger Corporation's chief executive, was paid $505,000 in salary.

Mr. Hilfiger's total cash compensation of $14 million -- including salary and bonus -- pales against the $152.6 million, including $141.9 million estimated value in stock options, that Sanford I. Weill, chief executive of Travelers Group Inc., now Citigroup, earned last year. But Mr. Hilfiger has few rivals in salary, receiving 17.9 times more than the average for executives in the S.& P. 500. The second highest was Dwayne O. Andreas, who retired last year as chief executive of the Archer Daniels Midland Company and who earned $3.65 million in salary.

Still, Mr. Hilfiger's salary is calculated in large part on sales. Under his contract, Mr. Hilfiger receives a base pay of $900,000, plus a payment of 1.5 percent of net sales greater than $48.3 million. In its fiscal 1997 year, which ended in March 1997, the Tommy Hilfiger Corporation had net sales of $661.7 million.

Donna Karan has a somewhat similar arrangement.

Last year, she had a relatively modest base pay of $500,000 and waived bonuses and options. But she ended up with $18.1 million in overall compensation because of a deal that gives her 1.75 percent of all sales greater than $250 million, and 3.5 percent of sales $1.5 billion or more. All told, Ms. Karan was paid 10.7 times more than her peers -- the highest among apparel executives.

''The only other industries that tend to dish out dough like this is Wall Street and Hollywood,'' Mr. Crystal said. ''You can also see this all looks highly personal, where people seem to take what they want. How else do you explain Tommy, when no one in the history of the world has a base salary like that?''

Others in the industry argue that such designers-turned-executives are being paid not just for their management skills.

''These guys are responsible for the overall brand image of the company as well as overall design direction,'' said Kirk Palmer, an executive recruiter for the apparel and retail industry. ''It is the person who can make or break the company.

''Like in the sports industry, if you need a great guard and you want Michael Jordan you know what you're going to have to pay.''

Donna Karan International echoed this argument, saying in a statement that Ms. Karan's licensing deal ''is a legal obligation of Donna Karan International and reflects the fact that Ms. Karan's name has considerable value among consumers of fashion merchandise.''

The Tommy Hilfiger Corporation declined to respond to questions but said in a statement that ''by reinforcing sales and earnings growth, the compensation structure has helped to make the company one of the most profitable in its industry.''

Hilfiger's sales and earnings have indeed grown at a respectable rate since the company went public in 1992. But after reaching a 52-week high of $70.375 in June, Hilfiger shares have fallen nearly 50 percent. They are almost where they were at the start of the year, while the S.& P. 500 is up 3.62 percent.

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Shares of Donna Karan, which went public in June 1996 at $24 a share, have fallen dramatically this year, closing yesterday at $5.4375.

Shareholders are usually interested in only the value of a designer's name as it translates into value for them. Of the nine companies examined by Mr. Crystal, only Jones Apparel Group Inc. stood out in performance: only 21 percent of the companies in the S.& P. 500 had better performances.

Compare that with Hilfiger, which underperformed 45 percent of similar-sized companies in the S.& P. 500 last year, or Donna Karan, whose company performed worse than 91 percent of such companies

''The shareholder didn't hire her to hype sales,'' Mr. Crystal said of Ms. Karan. ''They hired her to maximize returns.''

And it is not only the big designers earning the big money in the apparel industry. In terms of pure dollar amount, Linda J. Wachner, chief executive of both the Warnaco Group and the Authentic Fitness Corporation, earned a total of $29.6 million last year through contracts with both companies, making her the highest paid in the group.

Her salary was $3.6 million, but her options totaled $17.1 million in present value, not including her $3.5 million in restricted stock. She also received $350,000 for ''certain expenses incurred in connection with the companies' expenses,'' according to a proxy statement.

''Warnaco's board of directors believes Linda Wachner is fairly compensated give the strong performance of the company under her leadership,'' the company said in a statement.

Relative to other companies with the same size and performance, Ms. Wachner was paid 7.7 times above what she ought to make, according to Mr. Crystal's analysis.

Other executives examined were Ralph Lauren, whose total compensation of $14.7 million placed him 4.23 times more than his peers, and Harvey Sanders, chief executive of Nautica Enterprises, who took home a total of $4 million last year, placing him just slightly above others running similar-sized companies. Paul R. Charron, chief executive of Liz Claiborne Inc. earned $3.7 million; Maurice Marciano, chief executive of Guess Inc., earned $959,000, and M. J. McDonald, chief executive of the VF Corporation, maker of Lee and Wrangler jeans, among other products, earned $2.7 million. Sidney Kimmel at Jones Apparel Group Inc. was paid $9.4 million.

Not every apparel executive is overpaid, according to Mr. Crystal's analysis. Mr. Charon at Liz Claiborne, who is highly respected for a turnaround at that company two years ago, is paid 15 percent below executives of similar-sized companies. Mr. Marciano is 50 percent below peers, but the stock of Guess has not performed well in recent years. Mr. McDonald of VF is underpaid by 55 percent, according to Mr. Crystal.

Apparel chiefs, like other executives, are increasingly being rewarded in stock options, which give one the right to buy shares at a given price over a specified period of time. If the stock rises, the option holder can use the option, sell the stock at a much higher price and pocket the difference.

But while options are popular, nothing beats cash for some apparel executives. ''This group likes to pay themselves a lot of cash with few long-term incentives,'' Mr. Crystal said. ''They know betting on their stock price isn't good.''

Mr. Palmer, the executive recruiter, defends the practice, saying: ''Cash compensation is above average, but that's the nature of business. It is highly competitive with huge turnover and frankly I feel there continues to be dearth of talent and therefore companies pay for those who bring value, like a Tommy Hilfiger.''